In the US the holiday season does create in increase in consumption. Although, Halloween is not really known as a big money spending holiday it is easy to overlook with Christmas just two months away. This fall holiday is a kickoff to the increase in American consumption in a way. In this link it is stated that this year Halloween is expected to bring in an $8.4 billion revenue. This could be indicative of future growth in consumption for the holidays around the corner. With this "all-time high" revenue it could be seen as possible that the economy is in a growth period and could possibly reach Donald Trump's vision of 4% in Consumption.
Monday, October 31, 2016
Sunday, October 30, 2016
Chinese firms are investing heavily in American hotels
Chinese firms have been very active in buying American Hotels in the recent years. This year, a Chinese firm, HNA Group, will be the largest shareholder in the hotelier if they follow through with their announcement that they are going to buy a 25% stake in Hilton Worldwide Holdings. This hotelier includes brands such as Conrad, Embassy Suites, and the Hampton Inn.
"In April, an HNA division announced it was buying Carlson Hotels, which owns Radisson and several other brands. Last month, Anbang Insurance Group completed the purchase of 15 American hotels in a deal worth more than $5bn, including the JW Marriott Essex House in New York, the Westin St. Francis in San Francisco, the InterContinental in Chicago, a Four Seasons in Washington, DC, and two Ritz-Carlton resorts. And just last week came the news that China Life Insurance Co. is leading an investment group that is buying a $2bn stake in a collection of 280 American establishments. And just last week came the news that China Life Insurance Co. is leading an investment group that is buying a $2bn stake in a collection of 280 American establishments."
There are a few reasons why buying hotels for aviation and insurance companies is a good idea. The first reason is that the Chinese view American hospitality industry as a safe space to invest their money. The second reason is that it is a form of vertical integration in the tourism industry. "The recent slowdown in Chinese economic growth has caused jitters at home and prompted more investments abroad." Around 2 million Chinese people visit America each year, and is supposed to rise to over 3 million by 2020.
Chinese are hoping to receive as much of the $70 billion+ that tourists from the mainland spend abroad and at home this year. By buying/investing in American hotels, the Chinese are going to be able to control the entire travel process for Chinese travelers.
http://www.economist.com/blogs/gulliver/2016/10/rooms-growth
"In April, an HNA division announced it was buying Carlson Hotels, which owns Radisson and several other brands. Last month, Anbang Insurance Group completed the purchase of 15 American hotels in a deal worth more than $5bn, including the JW Marriott Essex House in New York, the Westin St. Francis in San Francisco, the InterContinental in Chicago, a Four Seasons in Washington, DC, and two Ritz-Carlton resorts. And just last week came the news that China Life Insurance Co. is leading an investment group that is buying a $2bn stake in a collection of 280 American establishments. And just last week came the news that China Life Insurance Co. is leading an investment group that is buying a $2bn stake in a collection of 280 American establishments."
There are a few reasons why buying hotels for aviation and insurance companies is a good idea. The first reason is that the Chinese view American hospitality industry as a safe space to invest their money. The second reason is that it is a form of vertical integration in the tourism industry. "The recent slowdown in Chinese economic growth has caused jitters at home and prompted more investments abroad." Around 2 million Chinese people visit America each year, and is supposed to rise to over 3 million by 2020.
Chinese are hoping to receive as much of the $70 billion+ that tourists from the mainland spend abroad and at home this year. By buying/investing in American hotels, the Chinese are going to be able to control the entire travel process for Chinese travelers.
http://www.economist.com/blogs/gulliver/2016/10/rooms-growth
Inflation, Long Quiescent, Begins to Stir Fed’s preferred measure reached a two-year high in the third quarter
"After being given up for dead, inflation is gradually coming back to life". Inflation in our economies is sometimes feared by general public. Inflation levels have been below the Fed's preferred 2% target level, causing banks to openly entertain "inflation bubbling over 2%". Furthermore, "The intellectual case for low inflation is also showing cracks", leading economists curious as to whether or not inflation rate will soon increase.
Investors continue to remain skeptical that inflation will rise above 2% percent although"many of the assumptions that underpin their skepticism are no longer warranted". Since oil prices have reached an extremely low levels, it is unlikely they will fall any further. Rates that are typically inversely related, inflation and unemployment rate are both low. Since 2007, unemployment has fallen from 10% to 5%, and looks to continue that way as Yellen speaks approvingly of allowing unemployment to fall to inflation accelerating levels. This is leading economists to fearfully think that they may no longer be related in this way. This makes the already difficult task of controlling inflation harder, and raises the bigger question... how will the fed deal with the slow economic growth rate?
http://www.wsj.com/articles/inflation-long-quiescent-begins-to-stir-1477861130
Investors continue to remain skeptical that inflation will rise above 2% percent although"many of the assumptions that underpin their skepticism are no longer warranted". Since oil prices have reached an extremely low levels, it is unlikely they will fall any further. Rates that are typically inversely related, inflation and unemployment rate are both low. Since 2007, unemployment has fallen from 10% to 5%, and looks to continue that way as Yellen speaks approvingly of allowing unemployment to fall to inflation accelerating levels. This is leading economists to fearfully think that they may no longer be related in this way. This makes the already difficult task of controlling inflation harder, and raises the bigger question... how will the fed deal with the slow economic growth rate?
http://www.wsj.com/articles/inflation-long-quiescent-begins-to-stir-1477861130
Raising US interest rates would now make recession even more likely
This article talks about how a recession might occur by the spring of 2017, and a rise in the US interest rates would increase the likelihood of an upcoming recession. Liquidity is suddenly 'drying up', indicating that the supply of money is decreasing, pushing interest rates higher.
The nominal GDP, a pure measure of the economy, has decreased from 4.2% to 2.5%, a drastic fall that cannot be funded since China has already pushed its credit limit to $30 trillion making borrowing unlikely. The tight monetary policy suggests that money supply is decreasing, pushing interest rates higher. New rules for the money market funds have caused the stock of U.S. commercial paper to shrivel by $220 billion. The three month lending rates in the offshore 'eurodollar' markets have tripled since July to 0.93%, therefore sharply tightening conditions for global finance, and limiting the chance of foreign borrowing to fund its economy.
The gross domestic income has been flat for the past quarters, and the unemployment rate has risen to 5%, after bottoming at 4.7% in May. This shows that components of the economy - nominal GDP, unemployment rates, and Gross domestic income - have decreased, indicating that a recession is likely to occur soon.
The average price level is also increasing, and the "sticky price" inflation has reached 2.6%, higher than nominal GDP growth itself. The effects of stagflation, along with decreasing Gross Domestic Income, are detrimental, and affects the GDP per-capita. It also reduces consumers affordability to purchase a good/service, decreasing the aggregate demand of households, and decreasing aggregate supply of firms, since they lay off input/labor resources to cut costs.
These changes negatively affect the economy, thereby showing that a fiscal stimulus would be an alternative to negate the effects of a recession. Decreasing taxes, and increasing government spending has its advantages on households and firms, but decreases national saving, and affects the trade balance of an economy.
Link: business.financialpost.com/news/economy/raising-u-s-interest-rates-now-would-make-recession-even-more-likely
This article talks about how a recession might occur by the spring of 2017, and a rise in the US interest rates would increase the likelihood of an upcoming recession. Liquidity is suddenly 'drying up', indicating that the supply of money is decreasing, pushing interest rates higher.
The nominal GDP, a pure measure of the economy, has decreased from 4.2% to 2.5%, a drastic fall that cannot be funded since China has already pushed its credit limit to $30 trillion making borrowing unlikely. The tight monetary policy suggests that money supply is decreasing, pushing interest rates higher. New rules for the money market funds have caused the stock of U.S. commercial paper to shrivel by $220 billion. The three month lending rates in the offshore 'eurodollar' markets have tripled since July to 0.93%, therefore sharply tightening conditions for global finance, and limiting the chance of foreign borrowing to fund its economy.
The gross domestic income has been flat for the past quarters, and the unemployment rate has risen to 5%, after bottoming at 4.7% in May. This shows that components of the economy - nominal GDP, unemployment rates, and Gross domestic income - have decreased, indicating that a recession is likely to occur soon.
The average price level is also increasing, and the "sticky price" inflation has reached 2.6%, higher than nominal GDP growth itself. The effects of stagflation, along with decreasing Gross Domestic Income, are detrimental, and affects the GDP per-capita. It also reduces consumers affordability to purchase a good/service, decreasing the aggregate demand of households, and decreasing aggregate supply of firms, since they lay off input/labor resources to cut costs.
These changes negatively affect the economy, thereby showing that a fiscal stimulus would be an alternative to negate the effects of a recession. Decreasing taxes, and increasing government spending has its advantages on households and firms, but decreases national saving, and affects the trade balance of an economy.
Link: business.financialpost.com/news/economy/raising-u-s-interest-rates-now-would-make-recession-even-more-likely
http://www.cnbc.com/2016/10/17/traders-watching-inflation-for-clues-on-growth-fed-policy.html
As the September CPI and third- quarter earnings draws inched closer to its due dates, eyes were on inflation to determine whether the U.S. Federal Reserve will increases rates. The central bank sees it’s target of full U.S. employment close in reach while inflation numbers have already exceeded the 2% target rate, but there’s concerns that low interest rates and the economy becoming vulnerable as a result. It’s expected that these higher inflation rates will cause a decrease in real wages as a result of a still staggering economy lacking a growth.
As the September CPI and third- quarter earnings draws inched closer to its due dates, eyes were on inflation to determine whether the U.S. Federal Reserve will increases rates. The central bank sees it’s target of full U.S. employment close in reach while inflation numbers have already exceeded the 2% target rate, but there’s concerns that low interest rates and the economy becoming vulnerable as a result. It’s expected that these higher inflation rates will cause a decrease in real wages as a result of a still staggering economy lacking a growth.
Applications for US unemployment aid remain at 43-year low
The number of weekly applications for unemployment benefits remained at a 43-year low since November of 1973. The unemployment rate, as of late, has been hovering around its target percent at 5%. Still, many were skeptical that the decrease in unemployment would be short lived. However, applications for benefits are typically associated with job cuts by companies. The number of applications for unemployment benefits is a useful job indicator and this suggests that we may continue to see similar unemployment rates. Many economists contribute the reduced rate to robust job gains over the past few years. The job market could be seeing the longer term effects of companies hiring more.
http://finance.yahoo.com/news/applications-us-unemployment-aid-remain-123707809.html
http://finance.yahoo.com/news/applications-us-unemployment-aid-remain-123707809.html
FINANCE PROFESSOR: 'There is good reason few economists have endorsed Trump's economic plan'
Over the course of the the presidential election race and during the last few presidential debates, Republican Party nominee, Donald Trump, has informed Americans and the rest of the world his intended plan to raise the U.S economy 3.5 to 4% and generate over 25 million new jobs. Like every plan, most of them sound good, but of course many economists are begging the question whether or not Trump's "America First" plan will actually generate the success he proclaims that it will. Included in this plan is a 45% trade tariff against China, in which judging from past experiences with similar action, many people believe that this will negatively affect the U.S economy due to retaliation from other countries. China is a major trade partner to many countries across the world, and by implementing such a tariff, this could raise and create unneeded tension between the U.S and other countries. The U.S GDP is expected be around 3% in the year 2020, which hasn't happened in the last decade. Trump seems to continuously ignore the economic growth that has taken place over the last couple of years, and it seems there are many doubting that this plan will increase our economy more than it has been, as many believe that it will actually have a negative affect. President Herbert Hoover signed a tariff similar to the one proposed by Trump in 1930, which deepened the Great Depression. It is easy to see why people are concerned about this tariff plan, seeing that it hasn't worked in the past. Trump also plans to decrease the corporate tax rate from 35% to 15%, and once again, judging by any past actions like this give no reassurance that this would have a positive impact to the U.S economy. Economist believe that this would increase our deficit and predict the loss of millions of jobs. With the amount of taxes Trump proposes to cut, he has still not said how he plans to make up for all of that money that our government would be losing by cutting the taxes, and how he plans to offset them. It would be very risky to cut taxes by such a degree without there being a clear way to off set the money, so maybe the economist's fears are for good reason, and why few have endorsed Trump's economic plan for the U.S economy going forward.
http://www.businessinsider.com/trumps-economic-plan-a-finance-professors-opinion-2016-10
http://www.businessinsider.com/trumps-economic-plan-a-finance-professors-opinion-2016-10
Higher Optimism and Confidence in Abu Dhabi
Despite economic fluctuations, Abu Dhabi has higher optimism and confidence among consumers and businesses for the second quarter of 2016. UAE and Abu Dhabi continue to deal with impacts of international developments greatly affecting the oil markets. This rise in confidence stems from positive expectations of future economic conditions. The attractiveness of the business environment and investment climate of the Emirate shows an upward trend in various sub-indexes.
The main issue for Abu Dhabi was fluctuating oil prices because that was the bulk of their economy. Diversifying their economy and enhancing the non-oil sectors has helped bolster the economy with the contribution of non-oil activities to Abu Dhabi's GDP at 51.5% in Q2 of 2016. Just like any other country, Abu Dhabi is affected by international, regional and local economic developments especially uncertainties facing economies of countries such as Japan, China, and UK.
Keeping positive outlook is key so that Abu Dhabi can avoid the self fulfilling prophecy.
http://0-search.ebscohost.com.dewey2.library.denison.edu/login.aspx?direct=true&db=nfh&AN=6FI860876837&site=ehost-live
The main issue for Abu Dhabi was fluctuating oil prices because that was the bulk of their economy. Diversifying their economy and enhancing the non-oil sectors has helped bolster the economy with the contribution of non-oil activities to Abu Dhabi's GDP at 51.5% in Q2 of 2016. Just like any other country, Abu Dhabi is affected by international, regional and local economic developments especially uncertainties facing economies of countries such as Japan, China, and UK.
Keeping positive outlook is key so that Abu Dhabi can avoid the self fulfilling prophecy.
http://0-search.ebscohost.com.dewey2.library.denison.edu/login.aspx?direct=true&db=nfh&AN=6FI860876837&site=ehost-live
Time to Buy Stocks?
Many are looking for the stock market to improve in the coming months. November has marked the start of, historically, the best six months for stock increase. Since 1950, on average, stocks have risen by 7.4% from November through April and only a dismal increase of .4% from May through October. With the stock market having little progress since December of 2014, investors are hopeful for a turnaround. It is noted that investors should not worry about a potential interest rate hike as the price increase is most likely already incorporated into the stocks price. To help investment, it appears the economy is already increasing its growth rate to around 3%, compared to the first half of 2016 where the growth rate was averaging around 1%. Despite these positive signs, there are still some doubters out there that are planning a defensive end to their investing in 2016. This is due to the decrease in corporate stock buy backs the economy is seeing recently. It is generally a good sign of optimism when a company is implementing a stock buy back program, when a company stops buying back those stocks it is not a good sign. So there is some merit to what the doubters are arguing.
http://www.usatoday.com/story/money/markets/2016/10/28/stocks-season-for-gains/92845446/
EU, Canada sign free trade deal but battle is not over
The European Union and Canada has signed a free trade agreement this Sunday which aims to create more jobs and growth, although it still needs to clear regional parliaments in Europe to become fully enforced. The deal will eliminate tariffs on almost 99 percent of goods. The beneficiaries would include, for example, car makers or the EU textile sector, for which Canadian duties of up to 18 percent can be imposed at present. Supporters say that the deal will increase Canadian and EU trade by 20 percent and boost the EU economy by 12 billion euros ($13 billion) a year and Canada's by $9 billion.
http://www.cnbc.com/2016/10/30/eu-canada-sign-free-trade-deal-but-battle-not-over.html
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